Sprint boasts about Boost while postpaid net adds plummet

Sprint Nextel continues to struggle with subscriber losses but had some positive results in terms of cash flow and debt reduction. The company this morning reported consolidated net operating revenues of $8.2 billion, with a free cash flow of almost $800 million and a cash balance of $4.5 billion, which CEO Dan Hesse said reflects the firm's financial stability. However, the company is still losing postpaid subscribers at an alarming rate. Sprint Nextel had a net loss of 1.25 million postpaid customers in the quarter, for a total customer base of 49.1 million compared with 49.3 million at the end of 2008.

Sprint CEO Dan Hesse tried to spin the positive while downplaying the negative on this morning's earnings call with investors. Hesse praised Boost Mobile's Unlimited plan, which uses the firm's iDEN network, as  the one bright spot in the company's subscriber retention plan. Sprint gained a net 764,000 prepaid iDEN customers in the quarter.  Here's a breakdown of the other key metrics:

Subscribers: The company ended the quarter with a total subscriber base of 49.1 million, down from the 49.3 million at year-end 2008. Of those customers, 35.4 million are postpaid, 4.3 million are prepaid and 9.4 million are wholesale and affiliate subscribers. Of the 35.4 million postpaid subs, 25.3 million are CDMA and 8.9 million are iDEN. The remaining 1.2 million are Power Source customers, meaning they use both networks.

Open Network: Subscriber growth in wholesale was primarily driven by open network devices such as the Amazon Kindle 2.

Churn: Postpaid churn was 2.25 percent in first quarter, up from the 2.15 percent in fourth quarter 2008. Sprint said the increase in churn was primarily due to deactivations on business lines, made worse by the current economic conditions. Boost churn in the first quarter was 6.86 percent, down from the 8.20% in the fourth quarter of 2008 and way down from the 9.93 percent in the year-ago period. The company said the upswing in churn was due to a larger subscriber base as a result of Boost's unlimited plan.

ARPU: Postpaid ARPU was $56, the same as the previous two quarters. The stable ARPU was primarily due to fixed-rate bundle plans such as Simply Everything.

Data ARPU: Data ARPU contributed more than $15 to postpaid ARPU in first quarter. CDMA data ARPU was $18.

4G: Sprint says it will have 10 4G markets in 2009.

For more:
- see this press release

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